5 hours ago | October 31st, 2014 05:28:14 GMT

Nikkei up 4.14% and posts session highs of 16455.84

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  • currently back down to 16318.54 in manic trading after BOJ easing
  • USDJPY highs of 110.69,  new 6 year highs , currently 110.57
  • EURJPY 139.08 from 139.21 highs
  • AUDJPY 97.21
  • GBPJPY 176.78

Crazy days and I hope it’s suiting the ForexLive community.

1 Comment

5 hours ago | October 31st, 2014 04:58:51 GMT

ForexLive Asia FX news wrap: A day of waiting for the BOJ … then … BOOM!

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Forex news for Asia trading Friday 31 October 2014

Very little movement on the currencies in the Asian timezone today; EUR, GBP, CHF confined to tight ranges; all just a fraction lower for the session.

Yen crosses were relatively quiet too ahead of the BOJ announcement. USD/JPY edged towards the overnight high, with EUR/JPY just a little below it for the session.

AUD was flattish too.

The NZD had some activity, dropping after the building permit data. It found a bid on the Fonterra news (see bullets, above), but was rejected again just above 0.7850.

Oil and gold were both sideways too, running pretty much along the overnight lows or barely above.

AND THEN …

BOJ announcement: EASES FURTHER – Expands monetary base target

On the BOJ announcement of unexpected further easing the Nikkei soared and the yen was dumped. Up above 110 against the USD and to a 6 year low for the yen.

4 Comments

6 hours ago | October 31st, 2014 04:21:07 GMT

EUR – UBS still bearish on the euro – will be even more so should the Fed accelerate rate normalization

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via eFX:

Investors are almost uniformly bearish on the euro, but their positioning appears to be lagging, at least on the real money side, notes UBS.

  • “The fundamental picture is gloomy for the Eurozone, but this is widely expected and might thus be in the price. Economic underperformance may thus not be enough to drive the euro down,” UBS argues.

ECB frictions:

  • “The euro remains highly sensitive to ECB actions. Yet we do not currently expect full-fledged QE, not least as headline inflation is likely to rise over the next few months if only on base effects,” UBS adds.

UBS euro and EURUSD 31 October 2014

Mixed fundamentals:

  • “Fundamentally, the large external surpluses remain a positive. However, global reserves not growing anymore might turn into a negative as diversification flows have provided substantial euro support over the last few years. Yet the most important euro negative might be exogenous once again: The Fed slowly but steadily normalising its monetary policy stance,” UBS clarifies.

All in all moderately bearish:

  • “Our analysis of the various cross currents leaves us moderately bearish on the euro…As a result, we stick to our 3m EURUSD target of 1.25, envisaging a more aggressively bearish call only if the Fed were to accelerate its pace,” UBS projects.

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More investment bank research and more at eFX

1 Comment

6 hours ago | October 31st, 2014 03:48:57 GMT

New Zealand – China lifts the ban on Fonterra’s whey products

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New Zealand

-  China lifts the ban on Fonterra’s whey products

Headline via Twitter – I’m trying to find out more, get confirmation from other sources etc.

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On the Bloomberg now:

  • The Ministry of Primary Industries has advised Fonterra that the Chinese government is lifting the temporary suspension for export of Fonterra base powder for infant formula and Fonterra whey powder to China
  • The suspension had been in place since August of 2013

 

5 Comments

6 hours ago | October 31st, 2014 03:35:36 GMT

No, I haven’t missed it … still no word from the BOJ

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Still waiting for the Bank of Japan (BOJ) announcment.

Here’s some previews to keep us going in the meantime:

Preview of the BOJ announcement due on 31 October 2014  

Preview of the BOJ from Goldman Sachs, BoA/Merrill Lynch & Barclays

Or ….

Here’s Zhu – ‘Faded’ … not the original clip which may be a little NSFW:

(original clip can be found here, if you want … just add in the www.

youtube.com/watch?v=zk3r-K8TQ5g

2 Comments

7 hours ago | October 31st, 2014 02:56:57 GMT

BOJ may expand monetary easing should the GPIF lower its domestic bond allocation

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Via Bloomberg today:

  • The BOJ may expand monetary easing should the Government Pension Investment Fund lower its domestic bond allocation to 35%, analysts say.

In brief:

Barclays chief rates strategist for Japan research Akito Fukunaga:

  • Reduction to 35% would signal the government’s “strong” determination to bolster stock market and raise sales tax
  • Considering the “all-out” execution of Abenomics, it wouldn’t be surprising if BOJ decides to boost monetary easing (but  notes Barclays’s base-case scenario is for no additional easing at today’s meeting)

SMBC Nikko strategists:

  • Should GPIF reduce holdings in next 16 onths, monthly sales may exceed 1t yen ($9.1b); although such selling could be absorbed in secondary market, it would probably be a drag
  • BOJ may step up bond purchases to cushion GPIF selling

 

0 comments

8 hours ago | October 31st, 2014 02:06:23 GMT

Preview of the BOJ from Goldman Sachs, BoA/Merrill Lynch & Barclays

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Preview of the BOJ from Goldman Sachs, BoA/Merrill Lynch & Barclays

Via eFX

The following are the expectations for todays BoJ meeting as provided by the economists as Goldman Sachs, Bank of America Merrill Lynch, and Barclays Capital.

GS:

  • In Japan, our resident Economics Team expects extensions in the quantitative and qualitative monetary easing scheme to be announced not on this occasion, but at the December meeting.
  • The BOJ will also release its Outlook Report (Outlook for Economic Activity and Prices).
  • The BOJ under-estimated the pullback after the consumption tax hike and clearly needs to cut its FY2014 forecast sharply.
  • However, we expect only a cut to +0.5% – +0.6% (consensus +0.3%) from the current +1.0% in the October Outlook Report.

BofA:

  • The BoJ is likely to lower its FY14 growth forecast, but still expect growth to be close to or slightly exceed the potential growth rate (which the BoJ probably considers to be 0.5%) and maintain its expectation that growth will return to a recovery path that exceeds the potential growth rate in FY15.
  • A downward revision of the FY14 growth forecast would mean a slower narrowing of the output gap than originally expected.
  • However, since the BoJ is of the view that the economy is close to full employment, we do not expect it to substantially revise its inflation forecasts (1.3% in FY14 and 1.9% in FY15; excluding the impact of the consumption tax hike).

Barclays:

  • The BoJ is sharply above Barclays and consensus in its FY14 real GDP forecast, and we expect it to reduce its forecast to about 0.5% (from 1.0% as of July).
  • We believe it could also lower its FY14 core CPI forecast to about 1.1% from 1.3%, reflecting lower oil prices, while continuing to convey confidence in its CPI outlook for FY15, partly to anchor expectations for 2% inflation “in or around” that horizon.
  • We expect the BoJ to refrain from further easing, opting simply to continue with QQE (keeping the monetary base on the current trajectory) until the CPI stabilizes at 2%.
  • In doing so, we believe it will officially drop any reference to the two-year time horizon for achieving its price target and refrain from setting new calendar-based targets for the monetary base once the current ones expire at end-2014.

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More investment bank research at eFX

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ps. I am expecting the BOJ announcement sometime after 0230GMT … but closer to 0330GMT given it’s a one-day meeting

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